Home Buying in 92675>Question Details

Lisa, Home Buyer in Orange County, CA

Bank accepted our short sale $$ offer but wil not pay for the closing cost assistance we asked for. We are willing to accept that counter offer...

Asked by Lisa, Orange County, CA Fri Nov 11, 2011

..sellers agent got approval letter from bank with an escrow closing date. Sellers agent drafted and sent counter offer for sellers to sign. Seller will not return calls or emails from their agent. Sellers agent will not show buyers agent the letter or the counter offer. This does not seem like ethical practice. We are poised to fund quickly, meanwhile the clock is ticking on the banks close by date. What action can we take to see this through, if any.

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Julie Boyd’s answer
I agree with Carla. I'd involve the Broker. You might have a situation of Seller's remorse. It is also possible that the Seller has been approached by an individual or company purporting to be able to keep the Seller in the property for a protracted period of time - rent free & the seller, through their non-responsiveness may be breaching their contract. An all out effort to reach the seller and re-start the communication process regarding new short sale questions that may have come up is needed. Also, many Banks, like B of A are now soliciting short sale sellers with offers of possible principal reductions & loan mods. Until someone can reach the reluctant seller, one can only speculate as to what is really going on! Sending you every kind wish for a positive outcome! - Julie Larson-Boyd
0 votes Thank Flag Link Mon Jul 2, 2012
Lisa:

Mostly good direction below as far as where you currently stand so I will refrain from reiteration.

To augment Emily and Julie's point below regarding the new law mentioned:

SB931 is the OLD "Short Sale Law" with an effective date of 1/1/11 thru 7/15/11. The law prevented a deficiency judgment after a short sale in most cases; however, it only covered First Trust Deeds on one-to-four residential units.

SB458 became law on 7/15/11. This law prevents a deficiency judgment after a short sale in most cases on ANY Trust Deeds on one-to-four residential units. You can read more about the new law here:

"CA Senate Bill 458 Now Prohibits 1st/2nd Deficiency Judgments*"
http://www.trulia.com/blog/steve_ornellas_mba_re_mastersgri/…

As a summary, where applicable, a mortgage lender involved in a SHORT SALE (as opposed to a judicial foreclosure) is now PROHIBITED from engaging in any of the following acts:

1) Collecting a deficiency, 2) Having a borrower owe a deficiency, 3) Requesting a deficiency judgment, 4) Having a court render a deficiency judgment, or 5) Requiring the borrower to pay ANY additional compensation, aside from the proceeds of the sale, in exchange for written consent to the short sale.

EXCEPTIONS:
1) A Lender seeking damages for fraud or waste; 2) the borrower is a corporation, LLC, or limited partnership; 3) cross-collateralized loan (special rules apply, not very common); 4) Borrower is a political subdivision of the state; 5) a bond lien; or, a public utility lien.

-Steve
1 vote Thank Flag Link Fri Nov 11, 2011
Did you ever get this resolved?? In a situation you described, I would go directly to the managing broker of the real estate office.
0 votes Thank Flag Link Sun Jul 1, 2012
Unfortunately it was not resolved ethically. Sellers agent never produced the Lenders Letter. We personally requested a copy from the Seller, and the Seller produced it, along with a demand of an additional personal check from us made out to her Aunt for $25,000. at the close of escrow. (which we declined and knew was illegal) The Letter had actually been executed much earlier than the date we had been informed of its arrival. The Bank had accepted our terms minus the closing costs and set the closing date. More issues ensued (we were accused of having a personal relationship with the seller because we contacted her by phone. They claimed by doing so we had violated the arms length agreement.) and we got the Selling agents broker involved. He stood behind his two San Clemente agents that were handling the listing and told us they would accept a new offer from us on the property as the closing deadline had just expired. We submitted a new offer with the exact terms the bank had already approved in their original letter. We were told there were no new offers on the property when we submitted it. Shortly after, we were informed they had accepted another offer. Bottom line, turned out the property sold for five thousand more than our offer. And the kicker was that Sellers agent and the Buyers agent were the same two San Clemente agents that listed the property...so they reaped the full commission plus their bogus 1% negotiating fee. Interestingly, their seller was then able to purchase another property immediately, after squatting in this property for 4 years, yes, 4. She and her agents knew all the tricks...going in and out of personal bankruptcy numerous times, etc. We also spoke to the previous listing agent of this property who verified he dropped her as a client as she was using deceitful tactics while he held the listing.
This, of course, is the abbreviated version of the story. It was by far the most unethical, unprofessional, devious situation we have ever witnessed.
It has soured us, and made us completely distrustful of most agents and brokers out there. We have been trying to make an honest purchase for 2 1/2 years now, and the dirty dealings and back door shenanigans that we have experienced is beyond comprehension.
Flag Mon Sep 17, 2012
This is simple: You need a copy of the approval letter, PER the short sale purchase addendum.

Joe, the 1st answer is in Penn. & is incorrect. The bank cannot ask the seller for a promissory note with new laws passed this last Jan. & July.

It's possible the bank is asking the seller to make a cash contribution, especially if there is a 2nd lien that was an equity line of credit. *(** YOU need to find out what this is!!! NOW. It's possible that you're getting such a killer deal on the house, that you may be able to assist the sellers with that contribution!

Stay ON your agent or the sellers agent. Ask for a SIT DOWN with the listing agent. You need this info NOW on what's going on.

It will be possible to get the close date extended as well. If you'd like to talk about this some more just email me, I won't look back on this same Trulia thread for answers posted after mine.

EmilyKnell1@yahoo.com
562-430-3053 c
Realtor Since 1996
Main Street Realtors
0 votes Thank Flag Link Fri Nov 11, 2011
Lisa, good morning. I hope things are starting to resolve themselves. I happen to be a short sale specialist. Whenever there is a counter offer, your original offer is no longer in force. The seller, presumably accepted your offer subject to the Bank's approval. The Bank chose not to approve. In the State of California, a new law was passed where Banks Can't act as principals any more (ha ha). This means the Banks technically can't counter offer. That would be acting as a principal which for those of us in the know, is a fundamental issue that we have been fighting to keep the Banks out of. Banks do not OWN the property, truly their only role should be to approve or disapprove the net payoff to them. The new laws are a step in that direction. Generally what we are seeing is more rejections of offers with a wink wink her is what we will do, on the side. What concerns me most is the Seller having put their head in the sand. The Seller could be in breech of his listing contract, and could not be acting in good faith to sell their home (the non response). They will have been the recipient of a heavy duty marketing campaign from the Bank to "keep" their home, "modify" the loan etc.... All of my clients are aware that anything that comes from the Banks is in the Bank's best interest. It's all about communication. All of my Seller's direct the Banks to call me not them. This also helps to keep the Seller's suffering to a minimum, and is more equally balanced, I am a professional debt negotiator, so are the Banks - we're well matched. What I would be doing in this situation is working with the Seller's side on an outreach to the suffering homeowner. You didn't mention you Agency relationships. If you are represented by a Buyer's Agent and the Listing Agent is not responding, I'd have them calmly, with empathy reach out the the listing side Managing Broker if there is one, and see if an outreach to the Seller can be started. It is a time to ASK not to tell. The other possibility is that since there was a counter offer, that there was more than one buyer and the other buyer may be the shining star. Personally, when representing a buyer, I put terms in the offer reserving a first right of refusal upon any counter offer. That way if there are multiple offers, and the Seller had accepted my offer, then the Seller is obligated to negotiate with you first, before opening it up to multiple counter offers. This keeps you in control. But that is not what I am hearing here. I am hearing a case of Seller's remorse. If the Seller can't be reached, then it is time to start shopping for another home. Best of luck to you and I hope this helps you move the CONVERSATION (Not battle) with the Seller in the right direction.

Best regards,

Julie Larson-Boyd
Home Buyers Realty
Southern California
Lic#01051535
0 votes Thank Flag Link Fri Nov 11, 2011
Lisa -

Skip hit it right on-the -nose.... You have certain rights and the Seller has obligations outlined in your Purchase Agreement and its Addenda as signed by you and the Seller.

Where is YOUR agent ? I hope you are not using the Seller's agent to represent you as well !

Another issue you may have is whether you have a deposit in escrow or not. If you do and the Sellers are not responding, how will you get that deposit released and returned?

It sounds like the Sellers may be trying to stay in the property longer and they may "think" they can do so by not responding. They may not have expected the approval to come through as quickly as it did !

As for the Closing Costs Credit - typically the Seller's Lender (Short Sale Lender) will only allow these credits if the Buyer is using FHA financing.

(Just a point of info for Joe Finnerty below. In CA, a short sale lender can no longer request a Promissory Note or any contribution in order to approve a short sale. The lenders have two choices: Approve it or Decline it - they cannot ask for any financial contribution / note from the seller as a condition of Short Sale Approval - ALSO, if a lender approves a short sale in CA - there is NO deficiency.)

Thom Colby
Broker / Negotiator
Newport Beach / Palm Desert CA
0 votes Thank Flag Link Fri Nov 11, 2011
Short Sales can be very frustrating for all parties involved. There are probably many things even the listing agent does not know. Sounds like the biggest problem is with communication, which is essential in all real estate transactions. If your agent is not getting return calls or emails from the the listing agent, have your agent reach out to their broker. Sometimes a disgruntled seller will cooperate with the broker. Keep in mind the seller is losing their home and probably sick of the whole process. Most likely they did everything possible to fight to keep it. Now the same bank that probably did NOT approve their load mod is making the short sale approval process even harder. Many banks will not pay for the buyers closing costs in a short sale transaction. In their mind, why should they? They are already losing money. It is critical that you see for yourself a copy of the short sale approval terms and conditions so you can decide if you will accept these terms. Sales price is one thing, but what about the rest of the items? You need to know what these are. The short sale approval letter is very detailed and spells out the exact terms of the deal. You can also have your agent call and check the date of the NOTS - Notice of Trustee Sale if indeed an NOD, and NOTS have been filed. This will give you a good indication of the action the bank is taking with the property. If it is this difficult now, you might want to ask yourself..."Is there a better property out there?"
0 votes Thank Flag Link Fri Nov 11, 2011
Hi Lisa,
I assume you signed a Short Sale Addendum form (SSA) with your offer. The answer to your questions are on this form. There is a stated time frame for when the seller must give you a copy of the approval letter. Also, the options the seller has if the original offer needs to be changed. In addition, there is a resolution process in the Purchase Agreement for parties that do not perform as required. Please review with you agent.
Good luck,
0 votes Thank Flag Link Fri Nov 11, 2011
I agree with Joe, have your agent contact the Seller's agent's broker. I just closed a short sale last week and it was amazing how many last minute fee's showed up within 24 hours of the scheduled closing. All surprises. Since you submitted the offer, you should be able to see a copy of the banks counter offer. But all parties still do have to agree and sign in order for it to be complete. Best of luck with your purchase.
0 votes Thank Flag Link Fri Nov 11, 2011
Unfortunately, it is possible that the sellers got fed up with the complete process and walked. Another possibility is that as part of the counter offer the sellers were being required to bring money to the closing or sign a promissory note and they won't do it.

Sometimes the counter offer also includes fees that may be required for you, the buyer, to pay. It is essential that you get the details of exactly what was in that counter-offer. If your agent feels that the sellers agent is not responding correctly he/she can always reach out to the agent's broker.

Hope this is of some help.

Regards,

Joe Finnerty
484-241-1641
Prudential Patt White Real Estate
Lehigh Valley, PA
0 votes Thank Flag Link Fri Nov 11, 2011
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